JTPP: Raising the Bar for CPG Sales Performance
By
John Walsh, Editor, Journal of Trading Partner
Practices
Through
a special arrangement, presented here for discussion is a summary of
a current article from The
Journal of Trading Partner Practices (JTPP),
the official online publication of the Vendor Compliance Federation
(VCF), Trade Promotion Management Associates (TPMA), and the Federation
of Credit and Financial Professionals (FCFP).
A
survey earlier this year done by AT Kearney found that, in dealing
with changing dynamics and market complexities, retailers are looking
to CPG manufacturers for “help in transforming consumer data into usable
insights across thousands of products and categories. Unfortunately,
many CPG salespeople lack these skills and cannot deliver the analytical,
financial, cross-functional and strategic abilities that retailers
need.”
The
survey of 164 executives and customer-facing salespeople from 34 CPG
manufacturers and eight retailers in the U.S. revealed that salespeople
now must act as “marketers, merchandisers, strategists, branding experts,
general managers, creative thinkers and collaborators.”
“Just
as consumers increasingly expect grocery retailers to provide meal
solutions rather than [just] meal ingredients, retailers are turning
to CPG sales forces to deliver comprehensive product, brand and category
strategies,” the report said. Companies that don’t conduct a “talent
triage,” to improve their sales force performance “risk losing market
share, brand strength, sales force productivity, top talent and importantly,
having their products ‘rationalized’ right off of retail shelves.”
Some
of the key challenges in establishing an effective and comprehensive
sales force talent management program cited by CPG manufacturers include:
- Identifying
Sales Talent: Nearly
60 percent of executive respondents said this is the most challenging
part of the talent management lifecycle, followed by developing talent
(25 percent) and retaining talent (17 percent). This is also a task
that becomes more difficult as competition for top talent intensifies. - Aligning
Talent With Customer Needs: When
asked to rate the importance of aligning the right sales talent with
the right customer accounts to optimize service and sales, 65 percent
of respondents said it is the highest priority. - Measuring
Performance: Respondents
generally gave themselves high marks in their ability to evaluate sales
force performance. However, they say they are less successful in mentoring
salespeople and recruiting more diverse people. They add that they
are less successful in using new metrics and measurement tools, innovative
retention tools and developing programs that help differentiate talent
from the competition. - Addressing
Diversity: At
a time when retailers are stepping up their efforts to appeal to a
diversity of shoppers through their marketing efforts, sales forces
at CPG companies are significantly less diverse than the national workforce
averages. CPG sales organizations have 28 percent more male employees,
57 percent more middle-aged employees (45 to 54 years old), and 13
percent more Caucasian employees than the 2008 U.S. working population.
Discussion Questions: Do CPG salespeople lack the skill sets needed to
truly collaborate with retailers? What skill sets do today’s CPG sales
reps need that haven’t traditionally been required?
Salespeople, manufacturers, suppliers, and also buyers, need to act now as marketers, merchandisers, strategists, branding experts, general managers, creative thinkers and collaborators. However, there are a couple of glitches that need fixing:
1. Retailers have a tendency to want to fix the economic environment with a sledge hammer rather than with a scalpel.
2. Manufacturers tend to see the retail environment only through the eyes of their own product; without adequate vision for the overall category and entire store.
3. Both parties need adequate consultation and training. This is often not the case.
4. The answers are not in the rear view mirror; and not always in the sku-rationalization process.
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Part of the challenge is credibility and getting the retailers’ attention. No matter how talented, knowledgeable and trained the CPG person is, many retail buyers feel they are the experts and don’t listen. Therefore, CPG people need to address how they build rapport to get credibility with the buyer. Proven results and analytical data will be one way to show proof of credibility.
Data-driven analytical tools have been widely available to CPG salesforces since Direct Product Profitability and space management software were developed in the mid-80s. When initially faced with the challenge of training “old guard” sales people with these new tools, CPG companies typically segmented talent into two types: sales people and data people. They found few who could bridge both talent sets.
So, teams were the norm, back in the dawn of this era. Since then, several universities have added curricula that produce sharp business analysts and strategists. However, sales forces are much smaller now, and CPGs are not budgeting for much that cannot be directly attributed to sales generation. Retailers have raised the bar of data analysis by increasing in-house and contract resources over the same period. Of course, their attention is often directed to Private Brands.
From my perspective, the main differences now versus the analytic heydays of the late 80s and the 90s are: the lack of excitement and the open-field atmosphere that fostered entrepreneurs’ involvement.
It stands to reason that if retailers are modifying their strategy to reach and retain customers that their providers have to do the same. CPG organizations that support retail efforts will gain the trust and inside track with them. What that means is CPG companies must reevaluate how they interact with retailers and modify their strategy, tactics and align their representatives accordingly.
This concept is not new. It’s a fundamental of marketing.
The barrier is in the semantics. The focus of the article is on CPG SALES representatives and historically CPG companies have differentiated between marketing and SALES. Integrating sales representatives and their functions within the overall marketing CPG strategy offers great opportunities because retailers recognize their need for marketing tools, including consumer insights, to influence shoppers and their in-store behavior. Traditionally they turn to the sales reps and these individuals are falling short of the mark.
To dismiss the potential by saying sales representatives are unprepared or untrained suggests that there is no foresight to educate current staff or hire the appropriate staff.
Savvy CPG companies recognize the needs of all their customers, retailers and consumers. They will adapt to meet the needs of these constituencies to survive and sustain a successful competitive difference. In so doing CPG companies will revitalize their SALES rep function and support their newly established RETAIL MARKETING REPRESENTATIVES.
The fact is, most retailers are looking for the CPG manufacturers to step up with information and analysis due to the fact that their own buyers do not possess the skill set. So the retailers are looking for the manufacturers to supplement their buyers’ and their merchandisers’ knowledge base. But the issue with this is that many of the manufacturers understand that this information might ultimately be used against them, and might be used to promote other brand’s placement on shelf. So why should the brand manufacturer feel comfortable coming forth with this data?
Most retailers, and yes this is a generalization, are doing a poor job marketing to the consumer. Let’s take supermarkets as an example. The store manager very seldom has marketing experience, yet he/she is in charge of developing marketing initiatives for their own store. Wouldn’t it be novel for each store to have its own marketing person, maybe someone who has been out of school for 3-5 years, who can really step up the marketing efforts on a store-by-store basis?
Which is a long way of getting to the question at hand. Are the CPG salespeople properly trained? Probably more so than the retailer to whom they are selling. I think the blame is being placed on the wrong parties.
The “outsourcing” of the some or all of the functions mentioned has been going on for some time. Retailers have become increasing dependent on their suppliers for data analysis and guidance (we often find suppliers who know more about the retailers business than they do). The difficulty is unless the retailers are willing to share all their data, the manufacturer is handicapped by lack of full disclosure. What the manufacturer can bring to the relationship is information across a wide spectrum of markets. This coupled with the retailer’s internal data provide a potent mix on which to make decisions.
All of that being said, I am not sure individual sales people today have the time and skill sets to achieve that level of analysis. What we see working is when there is a support team doing the “heavy lifting” and then providing the output to the sale personnel.
While I agree with notion that too many salespeople still see this as a war with the retailer (and the other remanufacturers in their category). It may only be a slight change in wording but I believe those that will win in the long run will see the battle not with each other but to win over the consumer. Few are trained with that mentality today.
Asking whether salespeople lack the skill set needed for retail collaboration begs the question: what, exactly, is that skill set? Today, I would say the ideal retail collaboration skill set for a brand salesperson would include strong analytical skills, sophisticated and creative promotion planning, technical proficiency with retailer data formats, an eye for merchandising, excellent communication skills, and the ability to manage multiple complex projects with different retailers simultaneously.
The person who has all those skills is hard to find. There are many technically adept, analytically-minded people who may not be the most effective communicators or most creative program designers. At the other end of the spectrum, there are many creative, articulate, organized people who can communicate and collaborate well with multiple retailers, but who lack the hard technical skills to crunch the numbers. For better or for worse, the majority of sales and marketing people at brands fall into the creative-but-not-technical category today.
The problem is that the fragmented landscape of retail data sharing, coupled with the inherent complexities of designing thoughtful, creative promotions, means that a brand salesperson who is creative but not technical (or technical but not creative) is destined to be substantially less effective in collaborating with retailers.
The solution, at least to me, is obvious: retailers need a platform for sharing sales data and collaborating with brands on promotions that is designed for non-technical salespeople and brand managers. Instead of raw data or highly-complex BI tools, the creative salespeople want simple, easy-to-understand, no-fuss analytics that can eliminate the technical burden they face today. By using software to lower the bar for technical skills, this would radically increase the pool of salespeople who could be successful.
To answer the question posed, we must first segment “Retailers” into two buckets. The first is the top 20 CPG retailers generally thought of when this discussion comes up. The second is everyone else.
The truth is that the first bucket (top 20) don’t really want to see traditional sales people anymore. They do so because that’s where the trade money comes from. Otherwise, they want to see the manufacturer representatives who can bring unbiased shopper insights to their own planning and merchandising process.
In fact, some of the largest retailers now specify that there is to be NO interaction between the category management personnel and the Sales people if the manufacturer is to be designated Category Captain. The Top 20 are working to become marketers who want data and insights, not merchants who need to be “sold.”
The sales process for selling into retail has changed dramatically over the last 10 years thanks to technology, available data and consolidation of both retailers and manufacturers. When I started introducing technology solutions into the CPG space specific to improving sales force knowledge and capabilities, I heard a lot of interesting feedback. One of my favorite comments made by a VP of sales at a major CPG manufacturer 11 years ago was “this technology is incredible, I only have one question: does it print New York Knicks tickets?”
Obviously a great deal has changed in the last 10 years and sales teams are well equipped with powerful solutions and insights to help them sell. With all of this change some of the basics like negotiations and sales skills have been pushed to the side and there is an opportunity. Even with richer data, faster delivery of insights and impressive ways to display the data, sales teams have lost some of their edge related to negotiations and general sales skills. I use several sales and negotiations tools and practices to help clients succeed and be more effective. A negotiation is not about a winner and a loser. It is about research, leverage and articulating your message and value effectively. If both sides accomplish what they set out to do, then it was an effective negotiation and sale.
If the last 10 years were focused on arming sales teams with powerful technology and data insight solutions; the next 10 years will be focused on stronger Negotiations and Sales skills.
Good insights above; most ground has been well covered. But they set me to pondering. It would seem that corporate agendas are constant things for retailers and manufacturers. Still it’s true that no river is a river than does not flow. Thus we continue to paddle for contemporary improvements.
When I read the questions for this topic I was puzzled about what are the clearest answers. Then I wondered what a great marketer such as P&G and a quality retailer such as Kroger would do to address these questions if they were to merge.
Could they become cohesive in spirit and more astute in identifying and aligning sales talents? Measuring dual performances? Addressing diversity? And thereby produce better sales reps, better retail science and improved sales and profits than they had previously attained individually?
If it were to be commonly accepted within these walls that most major strategic solutions must be developed outside the corporate box by consultants such as we, would CPG firms and retailers be able to raise the bar in the future in creating mutual sales performances? Being of the faith, I believe so.
As an industry we throw around terms and assume we all have the same understanding or interpret the meaning similarly. For example, what is “collaboration”? Is collaboration a strategic initiative? A financial one? A resource allocation process? Ask any random ten people in the industry and you will get fifteen answers.
What is shopper marketing? Shopper insights? Customer-centricity? Etc. No two companies (retail or manufacturers) are viewing it from a shared point of view.
In terms of having a well-trained sales force capable of performing collaboratively–what are we asking them to do differently than what they do now? At what level of competence? How will it be measured? What incentives are to be provided?
The issue is far more systemic than simply bellowing “business is down and the reason is those darn sales folks are no loner competent and need to be trained!” In the work I am currently doing with progressive clients, the issue is addressed from a perspective far more effective than this “check the box” approach to employee development.
To us, it’s always about the end user, not the retailer. And I think, for the most part, CPG sales people are starting to wake up to that. Pepsico’s testing center in Dallas is a good case in point. By doing both quantitative and qualitative research in advance, they’ve created a dialogue with the end users that can then be discussed with retailers. In other words, testing concepts at their own expense, THEN selling the ideas THAT WORKED to retailers. Imagine the difference in your sales approach when you have confirmed results in hand.
I think you’ll see a lot more of that in the future, especially since retailers are driven to “take the center store back” with private label and SKU reduction efforts. Hallelujah!
I believe triage is the right word here. The salespeople may not currently have the skill sets, but others within the manufacturers’ organizations do. Getting brand people and insights folks involved in the analysis is the wave of the future, especially with the emphasis on retail execution. The problem is that salespeople (really anyone) can’t be everything. They shouldn’t have to be. CPGs need to pull on their other, internal resources to help solve the issue.
CPG companies and their salespeople have been offering extensive support to chain and independent grocers for years. The problem is with the chain organizations or better said, disorganizations. Most chains cannot take advantage of the support suppliers have to offer because they do not manage their business. They hop from one silver bullet to another expecting the next great idea to solve all their problems.
Over 90% of chain grocers’ problems can be cured with great training and a pay plan designed for retention. About 5% of the chains “get it” but most don’t.
CPG companies and their sales forces have been successful in spite of the Grocery chains. Heck, if my local grocer could simply keep product in stock they could improve sales by 5% at a minimum. But I guess it’s too much for the stores to order sufficient inventory, or for headquarters to force out inventory to cover projected advertised sales. Any CPG sales rep can forecast +/- 10% what her is going to move during a promotion. Retailers, with minute by minute movement figures, can only use this resource to run out of inventory. The fact is, this doesn’t seem to be important to retailers.
For CPG companies to waste additional resources on retailers is the real waste here. I would encourage all of them to utilize the internet to try to sell as much product directly to consumers as possible.
Very timely since we are in the process of wrapping up our annual “Ten Supplier Mistakes” report based on interviews with retail decision-makers and licensors!
Problems with communication style topped the list of retailer peeves again this year and retailers are more frustrated than ever by salespeople who lack perspective (beyond the products and categories that they sell). This has become particularly problematic as retailer decision-makers change positions more frequently, bringing best practices from other categories and other retailers into their next position. New to the list was lack of “coordination;” suppliers who expect the retailer to pull everything together and, to Joan’s point, who don’t foster cross-functional collaboration within their own organizations. As “us and them” as the supplier/retailer relationship can be, it’s often a reflection of the same dynamic within the supplier company (sales vs. marketing, marketing vs. IT, etc.).
Responding directly to the discussion questions: (1) Yes, CPG salespeople lack the skill sets needed to truly collaborate with retailers, and (2) skill sets needed include ‘analytic capability’ and ‘strategic perspective’ primarily (among others) to successfully collaborate.
However, nowhere is it written in stone these skills must be provided by the salesperson, nor is providing these skills necessary or even appropriate for every retailer.
The wise CPG manufacturer has the necessary skills and capabilities available, most often within individuals other than the salespeople, and apportions out these resources according to their company’s strategic selling priorities. Unfortunately, however, there are only a small handful of these wise CPG manufacturers paying attention to this enormous opportunity…and it’s been this way for at least the past 20-30 years.
I am in the business and agree with this report. As we interact with both retailer and sellers of product it is apparent that a void exist in ANALYTICS, COACHING AND STRATEGY MASTERY. Yes there are plenty of folks “talking about this” but few who are actually applying science to the solution.
I offer this thought not as a criticism but as an opportunity for individual executives and managers to improve their own skills and thus the company’s as well. I feel particularly passionate about this subject because I see such great potential of individuals and companies that go unrealized.
Sadly, usually the impediment attacking such inaction is that greatest of enemy…Fear of change.
If anyone is interested to discuss further, I would be very happy to do so.